A Ford Bronco on display at the New York International Auto Show on March 28, 2024.
Danielle DeVries | CNBC
DETROIT — Ford Motor lead to major U.S. auto stocks falling this week amid disappointing results and investor skepticism about future performance.
Ford shares fell more than 17% early Thursday – on pace for their worst decline since 2009 – after the company missed Wall Street’s profit expectations due to warranty issues, a recurring issue with the company.
Shares of General Motors and Stellandis was also off after the companies reported their results this week. Shares of Teslawhich reported results on Tuesday afternoon, rose slightly on Thursday after their biggest daily drop since 2020 on Wednesday.
Detroit’s traditional automakers — Ford, GM and Stellantis — have been penalized in part because of industry-wide uncertainty, but more in response to individual issues.
GM, down about 7% this week, beat Wall Street expectations for the second quarter and raised its guidance for the year. Wall Street was impressed with the quarter, but investors pared losses in growth businesses, which rallied in the second half of the year, and fear the auto industry’s earnings power has peaked.
Stellandis reported “disappointing” first-half results, as Chief Executive Officer Carlos Tavares described them on Thursday morning, largely due to ongoing problems in its North American business.
The company’s NYSE-listed shares fell nearly 10%, trading near a 52-week low set in August of $17.57 a share.
Shares of Ford, GM, Stellantis and Tesla perform amid earnings reports this week.
Despite the ongoing problems, Stellantis reaffirmed its guidance for 2024 that includes a double-digit adjusted operating income margin, positive industrial free cash flow and at least €7.7bn of capital returned to investors in the form of dividends and buybacks.
“This is a very tough industry, a very tough time and everyone has to fight to perform,” Tavares said. “We will have to work hard to achieve this performance.”
Ford executives made similar comments when they reaffirmed its 2024 guidance, despite it being 21 cents below adjusted earnings per share expectations. The automaker reported an additional $800 million in unexpected warranty costs compared to the previous quarter.
Ford’s 2024 guidance includes adjusted earnings before interest and taxes, or EBIT, between $10 billion and $12 billion.
Several Wall Street analysts expressed dismay at Ford’s emerging warranty costs, but many were still bullish on the company’s underlying business.
Most notably, Morgan Stanley’s Adam Jonas kept Ford as the company’s “top pick” while downgrading GM from overweight to equal weight — despite the Detroit automaker’s standout quarter.
“Impressive results considering big losses in EV, Cruise and China. History shows good times won’t last,” Jonas said Tuesday in a GM investor note.
Jonas said the company sees more upside potential at Ford, “although our conviction is tested by ongoing challenges … many of which we believe are within management’s control.”
Shares of U.S. EV leader Tesla closed down 12% on Wednesday after the electric vehicle maker reported lower-than-expected quarterly profit and a fresh drop in auto revenue.
— of CNBC Michael Bloom and Lora Kolodny contributed to this report.
